Loss Reduction

Loss Reduction is a common term in foreign trade and logistics insurance. It refers to actions taken by the insured or their agent to prevent further loss when an insured event occurs during cargo transportation, storage, or delivery, thereby reducing the final loss amount. It is commonly used in marine, air, and land insurance claims, especially when cargo is partially damaged, lost, or delayed, and the insured has a duty to mitigate losses. Key points: mitigation measures must be reasonable and necessary; expenses can be claimed from the insurer; however, if the insured's negligence leads to increased losses, the increased portion may be rejected. Unlike 'Loss Prevention,' which focuses on pre-event risk control, Loss Reduction emphasizes post-event remediation. It also differs from mitigation in 'General Average,' which involves the common interests of ship and cargo. Foreign trade practitioners should clearly specify the duty to mitigate and cost-bearing in contracts and retain relevant evidence for claims.